Tracking the Lin Effect to teach young investors
02/27/2012 12:20 PM
05/16/2014 6:11 PM
If you’re looking for a way to make the stock market relatable to your children, I have the stock for you.
And no, I’m not talking about Apple.
I suggest keeping an eye on MSG Inc. If your kids are at all interested in sports, this might awaken their investing interests.
MSG — short for the Madison Square Garden Co. — had been a pretty dull stock story until recently. The sports, entertainment and media conglomerate, among other things, owns professional basketball’s New York Knicks, who haven’t won a championship ring since the early 1970s.
But this season the Knicks have a story to sell — Jeremy Lin, the Asian-American, Harvard University graduate who was twice cut from National Basketball Association rosters before joining the Knicks in December and entering the starting lineup in early February.
Since then, the unheralded Lin has become the hottest story in the sports world with his on-court play and off-court charm. And the Knicks have reaped the benefits at the ticket office and in the standings.
Which brings me back to MSG. Last fall, the company’s stock chart resembled a mudslide. But since Lin became a starter, shares have been climbing — not meteoric but steadily.
Shares in MSG are up about 15 percent this year to above $32 on the Nasdaq stock exchange, with about half that gain coming since Lin got on a roll. The stock has also become a favorite of at least three analysts who recently issued bullish profit forecasts.
How could you turn this into a lesson for young investors?
By tracking the “Lin Effect” on MSG stock.
Encourage your kids to follow the box scores as well as the financial tables over the next month or so. See how Lin performs on the court; then check the stock price the following day. Do Lin’s stat line and the team’s performance match the market movement? Keep it that simple.
Of course, there are so many other factors that contribute to a stock’s daily mood swings, so at some point you could explain how investors make money in the stock market, how shares are bought and sold, the advantages of buying low and selling high, and why it’s important to be able to read not only the basketball box scores but the financial box scores.
If this approach clicks, take it to another level. For example, what other publicly traded companies are benefiting from the Lin Effect? Walt Disney Co. comes to mind. It owns the ABC network, which televises NBA games, as well as cable-sports dynamo ESPN.
There’s also eBay, where buyers and sellers are upping the ante for Lin trading cards on the online auction site.
At some point, Lin’s hot streak will come to an end just as it does for any stock that’s been on a growth spurt. Then it may be time to share another stock market revelation or two with your kids — on the risks and rewards of investing, and how past results are not indicative of future performance.